China fever is sapping strength in market here

Lung-chu Chen

Apart from the influence the overall international economic downturn has had, Taiwan's sluggish economic development in recent years is mainly the result of the growing number of Taiwanese businesspeople falling prey to "China fever" and investing their money there.

Capital flowing to China has led to shrinking investments here and increasing foreign investment figures for China. China uses the capital that pours in from here for its economic development. Cheap labor lures companies to invest there. This has made China the "world's factory" in just a few years.

In the past, our businesses generally believed that cheap manufacturing costs were the only way to maintain a competitive edge.

Affected by rising manufacturing costs here and attracted by China's massive consumer market and low manufacturing costs, many businesspeople moved to China in an attempt to keep growing.

The short-term negative effects resulting from these businesspeople scrambling for the Chinese market is that production here is being shut down as manufacturing facilities are relocated across the strait.

Gradually, Taiwan's structural unemployment is worsening, while China sees increasing job opportunities.

If Taiwan cannot effectively prevent crucial facilities from being moved to China, it will be assisting China's upgrade of its manufacturing technology, thereby causing irreversible losses to Taiwan's industries.

The closer the economic and trade relations we have with China, the bigger the risk we have to face. Beijing's ambition to annex Taiwan remains unchanged. This autocratic regime has in its hand the central power over economy and politics. Given the fact that China's business regulations and competition rules are not well established within its closed system, it is not a suitable place for investment.

China is lagging far behind Taiwan in political democratization, economic liberalization and technological modernization. If Taiwan's industries continue to tilt toward China and economic exchanges keep increasing, then Taiwan will gradually lose its competitive edge and deepen its dependence on the Chinese market.

That is why we must establish the "Taiwan first" concept as a security guarantee for business development with China. This concept prioritizes Taiwan's security and sustainable development in developing bilateral economic and trade relations. Only when Taiwan achieves sustainable development can individual and enterprise activities be guaranteed. We must not just eye China's low manufacturing costs and consumer markets while ignoring the threat posed by its potential to compete with our own.

We should instead have the foresight to view China as part of the international market. Promoting advanced technological and industrial upgrades as well as exploiting the international market should be our targets.

Chen Lung-chu is the chairman of the Taiwan New Century Foundation.